01 December 2008

And We'll Need Your Entire Medical History Too

With nightly news reports on identity theft and stolen credit cards, people are understandably paranoid about it happening to them. Consumers are buying commercial grade shredders, checking their monthly statements with a new-found rigor, and paying attention to their credit reports and scores. But some are taking it too far when it comes to IDs and credit cards.

Many stores routinely ask for government issued ID from customers paying by credit card. Unfortunately, they are not only putting their customers at a greater risk, but they are opening themselves up fines from the credit card companies. According to the Visa Merchant Agreement (page 34) and the MasterCard Merchant Agreement (page 48), retailers are not allowed to make identification a requirement for paying by credit card. Exceptions are made for specific situations where required by law, namely age-restricted purchases. So, while state and federal laws may not prohibit requiring identification, the merchants signed contracts in which they agreed to not require it. (Note: There is a difference between asking for and requiring). And like all good contracts, there are repercussions for violations. In this case, they are fines in the range of thousands of dollars.

You'd think that the imminent threat of a $3000 fine would be enough, but most merchants never have had the pleasure of experiencing one. On the other hand, they've had the experience of chargebacks due to both fraud and unsatisfied customers. And that's where this whole ID required fiasco came from - thieves won't have ID that matches the credit cards they stole, so there won't be any more fraudulent card usage. Wouldn't that be a nice world to live in.

Credit card thieves can be split into two groups. This first consists of pickpockets and other criminals steal physical cards, where the goal is to use the card as fast as possible before it is reported stolen. Those credit cards typically come from a wallet, right next to government issued ID! But the picture won't match, you say. Well, yeah, a teenage girl isn't going to get away with using a 60 year old man's license. But what if people who look similar to the thief are targeted? Oops.

The second group houses the organized crime rings that buy lists of credit card numbers or acquire them on their own. Fake credit cards are made with the real numbers and names for use in retail stores. Guess what? They can also make driver's licenses! For the extra super bonus, the real user still has his card, so the number is yet to be reported stolen. More oops.

Moving right along, retailers like to claim that it protects card holders since they won't have to deal with the fraudulent charges if their credit card gets stolen. If it doesn't protect merchants, then it certainly doesn't protect the customers. In fact, it actually opens customers to a world of new problems.

If you search for cases of store clerks stealing credit card info, usually by skimming, you'll find more than enough cases to prove to yourself that it is real. If someone was stealing your credit card number, would you want to offer them more information? Or what if they just wanted to know where you were taking that shiny new 978" LCD television? I sincerely hope not. Yet people willingly hand over their driver's license.

As consumers, every one of us has a tangible investment in limiting our individual exposures to credit card fraud and other evils of the modern world. Keeping our addresses and driver's license numbers out of the prying eyes of unscrupulous sales clerks is just one of many measures everyone should take to protect themselves.


moonlightalice said...

This has been pissing me off a lot lately. EVERY supermarket in which I've used a credit card has asked for my ID, and when I refuse, they point to the printed out sign saying it's required. Where does it say that I don't have to show it? Who do I report it to?

osmodion said...

Some people print out the merchant agreements to show to cashiers, but I can't imagine that really works since no cashier wants to take the time to read and understand it.

I prefer to just report the stores:
MasterCard: http://www.mastercard.com/us/personal/en/contactus/merchantviolations.html
Visa: 1-800-VISA-911
Amex: https://www152.americanexpress.com/EformsWeb/un/ViewSuppressionPage.do?loc_str=en_US&utype=internet&origin=6

farniks said...

you convinced me on everything except your very last point. I don't understand how merely looking briefly at your ID allows the clerk to retain your name, address, and date of birth. You're not allowing them to make a copy of your ID. plus, there are other lo-tech methods to get your address without you taking out your ID, like having an accomplice follow you home.

osmodion said...

I know that I can remember an address after looking at it for only a couple seconds, and I can't be the only one capable. The cashier doesn't even have to remember it for very long as it could be written down as soon as the customer leaves.

While cashiers don't have photographic memory for every credit card and ID they see, cameras do. This spy cam is my personal favorite. While these particular morons put their own camera inside the store, consider how many security cameras any large retailer has aimed at its cash registers. Depending on the quality and positioning, a rouge security guard could be able to get all your info off the video despite the clerk only looking briefly.

As for lo-tech methods, just because they exist, doesn't mean that people shouldn't protect themselves from hi-tech methods. Thieves could steal credit card statements from your mailbox, but that's no reason to be reckless when shopping online.